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A few miles outside of Manhattan, “residents say [the area] offers the best of both worlds — a peaceful and relaxed atmosphere with a relatively easy commute to Midtown,” according to StreetEasy.
My mom has been living in the area for almost a decade, and as a mom myself, I knew I wanted to stay close to her — but I also wanted to stay in this city.
New York City is where I grew up, and I am not ready to give up my status as a “passenger princess” — yes, I’m 31 and don’t have a driver’s license. My partner’s priority was a good deal and our shared priority was a good school district for our son who will be heading to pre-school this coming fall.
I was connected to a couple in their 90s who were selling a two-bedroom co-op apartment. It had been on the market for about a year and was listed for $315,000. I negotiated directly with one of the sellers who agreed to our offer of $302,500. My partner and I signed a contract of sale in August 2023.
We didn’t work with an official broker because as a licensed real estate agent in New York State, my partner acted on our behalf for this purchase. Our entire team consisted of our home lending advisor, a client care specialist, and an attorney.
It took nearly six months to officially close on the home, which happened in January 2024. In that time, the sellers had to install brand-new floors in the apartment, and the title company even suffered a cyber incident at the end of 2023, which further delayed the process.
We’ve been living in our apartment for several months now, and I have spent some time reflecting on the things I wish we had done before we got serious about buying our first home.
I underestimated the importance of a credit score when applying for a mortgage.
The minimum score needed to buy a home can be as low as 500, according to Experian, but it all depends on your lender and the type of mortgage for which you’re applying.
“It’s similar to any financial instrument,” Dave Forbes, a Chase Senior Home Lending Advisor, says. “The bank wants to see what your ability is, not necessarily how much you can pay, but what your intention is, and how you handle debt.”
“There are four things that go into getting a mortgage: your credit, your income, your assets, and the property,” Forbes says. “The credit score is one of the key components that you have to make sure is in order.”
Certain documents will be requested repeatedly during the process of buying a home, especially if you are going with a conventional mortgage like we did.
Since our home-buying journey lasted several months, we had to send and resend certain documents to the bank.
In retrospect, these documents should have been in a folder ready to go at all times because they are what we now consider basic information: pay stubs, tax returns, W-2s or self-employment tax documents, bank statements, and a call sheet-like document with all the parties involved in the deal.
Forbes says that a bank typically asks for the paystubs and W-2 forms because the documents show the lender two different things.
“The W-2 is letting the bank know that you’ve been employed, and the paystub is showing us what you’re earning today and still employed,” Forbes said.
Forbes added that the lender also wants to see all the assets used to purchase the property.
Our home lending officer made us do the call sheet in the beginning, and I think everyone should have one ready to go when they start looking.
Having a document already filled out with the contact information of the team helping with our apartment search came in handy and allowed me to send the same document to multiple people who asked for it along the way to closing our deal.
As a first-time homebuyer, there are many grants and programs on a city and state level that can help you make your purchase.
What people don’t tell you is how long it can actually take to secure the funds. The application process for a program like the New York City HomeFirst Down Payment Assistance Program or the NYS AHC grant can take several months. Most of them also require you to have a property picked out already.
I applied for one particular grant that required the contract of sale to be included in the application. However, I wasn’t able to take advantage of it because my application status changed from the time I applied to the time we were ready to close.
That’s why Forbes suggests looking for programs that can assist in your home-buying journey right when you start your search.
“Do your research and find out about what is out there in the beginning,” he says. “Your home lender advisor should be the one to guide you through the process.”
I realize this isn’t an option for everyone and I am only speaking for myself and our family.
When we realized that the apartment we were buying was a good deal for the neighborhood and for us, we also realized that we wouldn’t have enough money to buy it just yet.
The grant I applied for didn’t work out, so we asked our families for help. We were lucky and blessed that my mom gifted us the rest of the money we needed for the purchase.
My biggest regret is not talking to our loved ones right at the beginning of our search instead of having to go to them when the grant didn’t work out.
Looking back, it would have been better to start this journey knowing that someone in our family could financially back us. It would have avoided so much stress for me because there were many days of thinking that we would have to give up on the apartment.
I spent a lot of time wishing I had saved more when I was younger instead of buying luxury handbags and shoes.
Having family or loved ones gift money for home purchases is on the rise for millennials and Gen Z, according to Redfin.
U.S. home prices are up nearly 40% from before the pandemic, and they rose 7% in the last year alone. A low supply of homes is propping up prices despite a decrease in demand, which is why young Americans are turning to family to help fund down payments, Redfin reports.
36% of Gen Zers and millennials who plan to buy a home soon expect to receive a cash gift from family to help fund their down payment, a Redfin-commissioned survey conducted by Qualtrics in February 2024 states.
The amount you’ll need for a down payment will vary depending on the purchase price and the kind of home you’re buying. My partner and I bought a co-op, which is very common in New York City.
Unlike a condo, where you buy the unit itself and a percentage of the common areas, with a co-op, you’re buying shares of the overall property, according to Bankrate.
A co-op is often cheaper than a condo, according to the National Association of Housing Cooperatives; however, the down payment is usually higher. The NAHC states that most co-ops require a down payment of at least 10% to 20%.
For a conventional loan, the minimum down payment is usually around 3%, according to Rocket Mortgage.
Our down payment was 20%, or $60,500. This was the reason we had to ask for help. If we had had the option to have a lower down payment, my mom wouldn’t have had to offer her financial support.
Closing costs vary based on many facts but generally range from 2% to 6% of the loan amount, according to NerdWallet.
The bank determines the closing costs; usually, lenders allow prospective buyers to get an estimate of these costs during the pre-approval process.
Our closing costs were over $13,000, including fees for the bank’s attorney, an appraisal, our first monthly maintenance fee, and more.
Forbes added that closing costs will also vary from lender to lender, and sometimes, they might even be negotiable, so it’s important to consider all different types of options when trying to secure a mortgage.
Whether you want to or not, chances are you’re going to go on multiple trips to the hardware store in the days, weeks, and months following your closing.
Having some money set aside is a good way to prepare for unexpected costs.
“You are heading into some new territory, you’re going to incur additional costs that you might not be used to and things might go wrong with the property,” Forbes says.
We spent several thousand dollars getting the apartment painted because of the condition it was left in after the new floors were installed, changing out outlets, buying a new bathroom vanity and more.
After our closing costs, we had just enough to pay for the painting, but then we were paying for everything else as we went or putting it on credit cards to pay off later.
Having extra funds from the beginning would have helped alleviate the feeling that all of our money was just going out the door right after the closing.
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